The pros and cons of full truckload shipping, and is it right for your business?
2019 to 2020 has been a rough road for trucking, but there is light at the end of the tunnel. McKinsey logistics research shows that transport volumes spiked at the beginning of this year then dropped significantly before slowly recovering. COVID-19 is making many aspects of logistics unpredictable, but trucking is faring better than rail and ocean shipping and is projected to bounce back faster than any other mode of transport. There have been recent spikes in truckload volume around the country, and capacity is getting tight again.
This will affect small-to-medium businesses (SMBs) that emerge from COVID-19 to face critical logistics decisions in recovery. Some of them will be leveraging the right truck transportation model, and FTL — full truckload shipping — may be the right fit. It is typically the choice of larger businesses, but that does not exclude it as a possibility for SMBs.
In this blog, you will learn:
The advantages of FTL
FTL challenges for SMBs
How RLG can help your logistics thrive
The advantages of FTL
Speed is the first advantage of FTL, and it can provide a vital competitive edge for SMBs. FTL deliveries head straight to the destination from the point of departure (a single shipper), as opposed to LTL carriers that use a “hub and spoke” system for moving freight — which incurs multiple handling through a few terminals before the goods ever get to the final customer. Faster shipping and less handling of cargo means happier customers, who can be given a time when their shipment will arrive, and arrive damage-free.
FTL companies also frequently specialize in shipping a particular kind of freight, meaning they will be experts in loading/unloading it, handling any paperwork or regulations that may be required and providing the optimum package arrangement for safe transportation. This familiarity with a product means FTL can significantly reduce cargo damage in transit. The insidious impact of cargo damage is a problem that costs shipper billions every year.
FTL may also be a more cost-competitive option that can be used even if your delivery does not fill a trailer. However, your company rents the whole truck, which may not be efficient. Shipments of 10 pallet positions or more that cannot be stacked, also known as “volume loads,” may be good candidates for FTL because LTL carriers usually charge a premium if you take up too much space in their trailers. Additionally, these volume loads shipped by SMBs may have access to spot rates. On a good day, these can be significantly lower than large-volume contract rates.
FTL challenges for SMBs
FTL challenges for SMBs are really FTL challenges for the whole American economy. 99.9% of U.S. businesses fall into the “small” category. Even so, the tiny percentage of larger companies can often hoard truck capacity to themselves through their greater financial resources and customer base. This puts added pressure on SMBs to be proactive in searching out FTL partners and in getting their goods on board as soon as possible to beat the rush.
It is likely that a classic con of FTL — potentially long waits for trucks to fill up before departing — will not be a problem for at least a while after COVID-19 ends. Businesses will be racing to get goods from A to B to ensure they meet their bottom line, and that includes FTL providers themselves. However, it is an issue that is bound to return for SMBs after things return to normal.
Loading charges are another area that can hurt an SMB’s budget. FTL deliveries usually require long loading and unloading times. It is the shippers who pay the price through additional charges if loading/unloading exceeds the expected time window. A smart way to minimize your risk of this extra expense is to properly package and prepare your goods for pick-up, which can shave a lot of time off the loading process.
Hours of Service (HOS) limit the amount of time a driver can be on the clock driving and waiting for loads. Drivers only get paid when they are on the road driving, so be aware of this as long loading and unloading times may make your company unattractive to carriers and drivers.
How RLG can help your logistics thrive
In a stressed logistics environment where shippers may have to take whatever truck they can get, it pays for SMBs to have this knowledge of FTL. One thing every business can count on, even now, is RLG’s commitment to minimizing their logistics spend no matter which transportation model they utilize.
From benchmarking your logistics spend and contracts to managing bids/RFQs for all modes of transportation, RLG can root out every possible way for you to save logistically. Our state-of-the-art technology and advanced logistics and supply chain analytics make expenses transparent across your entire operation, giving you data you need to make the most cost-effective decision every time.
Resource Logistics Group provides transportation and logistics advice combined with professional services and state-of-the-art technology. From contract negotiations to easing back-office burdens, we are your ally in excellence. Connect with us on our contact page for a free benchmarking analysis.